MOS 1021 Lectures 1-3.docx

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Western University
Management and Organizational Studies
Management and Organizational Studies 1021A/B

MOS 1021 Lecture 1 American Marketing Association: “Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders” Marketing: “Generating profit by focusing on customers and providing them with value through goods and services that meet their needs.” “A practical application of psychology, sociology, economics, and communications.” Customer Value: - Unique combination of benefits received by targeted buyers - Includes quality, price, convenience, delivery, service before and after the sale - Different customers will get different types of value from the same product/service - A single product will not satisfy everyone Target Market: The specific group of existing and potential customers we will focus our marketing on Marketing Mix (The 4 P’s) Product: Can refer to a good, a service or an idea - Good – something tangible that you can touch/feel (ie. Smartphone) - Service – intangible (i.e. Wireless Provider) - Idea – a concept that looks for support (ie. Earth Hour) Decisions Include: Design, Features, Packaging, Warranty, and Service Levels Place: Where to sell? Distribution channels, retail formats, wholesalers, or online Price: Expected regular retail or sale price for a product - What will we charge? - What is our target market willing to pay? - What are we trying to communicate with our price? (upscale vs budget) Promotion: Communication tools needed to inform customers about a product, including advertising, public relations, sales promotion, direct response, event marketing and sponsorship, and personal selling The Marketing Process: (A logical process that focuses on consumer needs) 1) Identify customers needs 2) Manage the marketing mix to meet consumer needs 3) Realize profits for a company (or objectives for non-profit organizations) Market: Potential customers who have both the ability and willingness to pay Consumers: Actual users of the product Evolution of Business Philosophies: Product Orientation (<1930): manufacturing focused. Manufactured goods tended to sell regardless of their quality, because they were in short supply Sales Orientation (1930-1960): selling as many products as possible focused. The market was more competitive and production more efficient. Marketing Orientation (1960s): focusing organizational efforts to collect and use information about customers needs to create customer value Relationship Marketing Orientation (1990s): create long term links with customers, employees, suppliers, and partners to increase loyalty and customer retention. - Relationship can last before and after the sale occurs Trends driving relationship marketing Internet technology allows unprecedented information capture - Social Media: online media that allows members to create their own network of friends and contracts to share comments, videos, and images as a form of self-expression - Database Technology-Customer Relationship Management (CRM): building and maintaining profitable customer relationships by delivering superior customer value and satisfaction (EXAMPLE. Capturing information at checkout, for example if someone is pregnant they would buy a pregnancy test) - Corporate Social Responsibility (CSR): Customers want to be associated with businesses that share their interests, so CSR considers the well- being of society by taking responsibility for how their businesses impact society (EXAMPLE. BMO reducing greenhouse gases, CIBC run for the cure) New Marketing Practices: Experiential Marketing: Consumers directly interact with brands (word of mouth) Partnership Marketing: - Associations between brands that result in increased profits for both brands that couldn’t have been achieved separately - Can be both short term (promotional partnerships) or long-term (strategic alliances) Metrics: measure and monitor business performance through data that is collected; Routine Metrics are measured against marketing plan targets and look at elements such as sales, market share, profit margins, and profit levels. Program-specific metrics analyze specific marketing programs and measure performance against benchmarks and targets. Lecture 2 SWOT analysis: assessing a company (Strengths, Weaknesses, Opportunities, and Threats) Factors: responding to trends and changes in each area allows more effective marketing plans to be developed (DCREST) Demographics Competitive forces Regulatory forces Economics Socio-cultural forces Technology 1) Demographics: Population Characteristics (Age, Gender, Ethnicity, Income, Occupation) – Can use Stats Canada, or own demographic info Generations; Canada has an aging population 2) Socio-Cultural Forces: cultural values, ideas and attitudes that are shared amongst a group; societies morals and beliefs (more difficult to measure) - Info not readily available - Changes tend to be gradual Trends: • Convenience foods: people are shifting purchases away from raw ingredients to pre-packaged foods • Health and Fitness: increases spending on fitness, sports, health products • Environmental awareness: trend towards green products • Evolving gender roles: dual-income families that are time-starved 3) Economics: the economy affects peoples overall ability to purchase - During poor economic times people defer purchases and buy only necessities - This affects some products more than others o Think of essential vs. non-essential products - Macroeconomic forces: o Growth rates – GDP – is the economy in a period of expansion or recession? o Inflation – are prices rising or falling? o Unemployment – what percentage of the population is unemployed? - Microeconomic forces: o Supply and demand of goods and services by individuals, households, and corporations o Gross Income: total amount of household money made in a year o Disposable Income: the after-tax income left to spend and save (if taxes rise at a faster rate than income, consumers have less disposable income with which to pay the bills) o Discretionary Income: after-tax income left after paying for necessities 4) Technology: new technologies are introduced and adopted by consumers at different rates - Canadians are tech-savvy vs. other countries o Canada ranks first in number of website visits per user per month (95 websites) o Candians lead the world in tablet use - New technologies can create new industries and destroy old ones o Internet replacing libraries as a research tool o Email replacing traditional mail o Streaming movies replacing rentals 5) Competitive Forces: - Direct competitor: Similar products sold in the same category o Eg. Pizza Hut, Little Caesars - Indirect competitor: Products competing for the same buying dollar; anything that can act as a substitute - Eg. Subway, Grocery Store 6) Regulatory Forces: - Need to be aware of regulations that affect how you are able to do business - Regulations are put in place to: – Protect consumers – Encourage fair competition – Ensure legal and ethical behaviour from businesses - Regulatory groups in Canada: o Competition Bureau o Canadian Radio, Television & Telecommunications Commission (CRTC) o Advertising Standards Canada (ASC) o Do Not Call List (DNCL) o Better Business Bureau (BBB) o Canadian Marketing Association (CMA) Porters 5 Forces: - Understand how competition affects industry profitability - Assess whether or not to enter a new market 1) Threat of new entrants: a. Puts downwards pressure on prices i. New entrants often compete on price to gain market share from existing players 2) Bargaining power of suppliers: a. Can capture more value by: – Charging higher prices – Limiting supply b. Supplier group is powerful if: – More concentrated than the industry it sells to – No substitutes for what they sell 3) Bargaining power of buyers : a. Can capture more value by: – Forcing down price by playing competitors off against each other – Demand lower price/better quality b. Customer group is powerful if: – Few buyers that purchase in large volumes – Face few switching costs in changing vendors 4) Threat of Substitutes a. Substitutes perform a similar function by different means - Travel: plane as a substitute for a car - Communication: email as a substitute for writing a letter b. Threat of substitutes is high if buyers have low switching costs 5) Rivalry among existing competitors: a. Depends on: – Intensity of competition – – Basis of competition b. Intensity is greatest when: – Numerous competitors equal in size – Industry growth is slow c. Basis of competition: – Price competition is the most destructive to profitability – Competition on other dimensions is preferable • Product features, service, brand image Airplane: Market Segmentation: Grouping prospective buyers into segments that share common needs and will respond similarly to marketing programs - A single product can’t satisfy everyone o Need to focus on consumers most likely to purchase o This is done by breaking the
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